Australia can help in the global effort to fight climate change without ruining its economy, according to the final report of the Energy Futures Forum.

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SYDNEY: Reducing carbon greenhouse gas emissions now will be cheaper for Australia than cleaning up the environmental damage that results from doing nothing, according to a new report.

The report, entitled The Heat is On: The Future of Energy in Australia is the final report of the Energy Futures Forum (EFF), a two-year long research project into the future of energy in Australia.

"We looked at how much it would cost to do mitigation in a range of different scenarios out to 2050 and we asked, 'what's the minimum damage that could be done that would [offset] the cost of the mitigation?'" said EFF member John Wright, of the CSIRO, Australia's national science agency.

The EFF's findings, while independent, confirm those of the British Government-sponsored Stern Report, released in November (See 'Stern reactions to climate change report', Cosmos Online), which found that fighting climate change now would be far less expensive economically than waiting to do so. "There's a real economic impact to not doing anything about it," said Wright.

According to the report, the Australian and global economies need not falter while the world works to slash greenhouse gases, but Wright admits that economic growth will be slower under carbon restrictions.

For consumers, retail electricity prices will increase between 7 and 20 per cent by 2050 due to carbon offset costs, but those increases will be below the change in real income per capita in Australia, which is expected to rise by over 100 per cent in the same period.

While electricity for households will likely remain affordable, energy-intensive industries like steel and aluminium production could suffer. According to Wright, "There's no doubt about it: if we want to make some serious cuts in greenhouse gas emissions there is going to be some pain to some parts of industry. The question is how do we minimise that pain?"

Worldwide cooperation in addressing climate change could lessen those effects by reducing the economic disadvantage caused by high energy prices.

Unlike the group behind the British report, the EFF brought together stakeholders in the future of energy in Australia, from government, industry and the community, to discuss and work together on the issue. "That was the whole point of the EFF," said Wright. "We decided that we would get together as diverse a group as we possibly could." The CSIRO modelled the scenarios that the Forum came up with, and then returned their models to the Forum for discussion.

The result of this cooperation, said Wright, is a strong consensus view on the way forward in regard to climate change.

The group acknowledged the political sensitivity of the issue and sought to provide neutral information on the subject rather than outline a policy position. "..we have not made recommendations for specific investments or government policy; instead we have sought to present a cogent view of the various elements to be considered," said a statement from the EFF.

Climate change was identified early on in the process by the EFF as the most pressing concern for the Australian energy sector, and therefore became the primary focus of the report. The report stresses that uncertainty regarding climate change policy in Australia increases investment risk, particularly in electricity generation. If the risks remain too high for too long then it could lead to higher electricity costs.

The findings are based on discussion of a wide range of research that was applied to the EFF's scenarios about what the future holds. This included economic modelling, risk-assessment analysis of climate change, and social mapping to gauge potential views of the public towards various energy options.

The work of the EFF is not finished, though. "There are a whole lot of unanswered questions," said Wright. According to him, the next step is figuring out the timing and nature of the mix of actions that will drive the shift towards a lower carbon energy future.